What happened

Shares of Vista Outdoor (NYSE:VSTO) traded up more than 19% on Thursday morning after the sporting goods accessories manufacturer reported better-than-expected quarterly results. Vista has been in a period of transition, but the company's latest numbers suggest management's efforts are beginning to bear fruit.

So what

Before markets opened Thursday, Vista Outdoor reported fiscal-third quarter earnings of $0.21 per share on revenue of $424.8 million, topping expectations for $0.13 per share in earnings on sales of $420 million. The company said its ammunition business delivered positive revenue growth for the first time in 11 quarters, growing 2% year over year.

Vista sold off its firearms business last year to focus on a portfolio of about 50 brands, including Bell, Bushnell, CamelBak, and Camp Chef, that serve bicycling, camping, and hiking enthusiasts. Although it sold its guns, it retained the ammunition business and was impacted by a push by major retailers away from firearms, including a decision by Walmart to stop selling certain types of ammo.

Hiking gear on a mountain trail.

Image source: Getty Images.

"While the external environment remains fluid, we continue to favorably position Vista Outdoor to deliver strong, profitable growth, and increased free cash flow," CEO Chris Metz said in a statement. "I am confident in the plans we have in place, and in our team's ability to successfully deliver on our full year expectations for Fiscal Year 2020."

Gross margin on its remaining shooting sport business gained 150 basis points from the prior year to 16%. The company's outdoor products business generated a gross margin of 25%, up 128 basis points year over year.

Now what

Vista Outdoor updated its full fiscal year guidance, saying it now expects to earn between $0.15 and $0.20 per share. That implies there is potential for a bit of upside to the $0.16-per-share consensus. However, the company did tighten the upside to its sales guidance, projecting full-year revenue of between $1.75 billion and $1.8 billion compared to previous guidance of between $1.75 billion and $1.85 billion.

Vista appears well on its way to stabilizing, and firearms-related companies usually perform well in election years. For those with an interest in the industry, this is a company worth keeping on the radar.